A recent court filing reveals a significant legal battle between a property owner and the City of Chicago over an amended ordinance that could have wide-reaching implications for landlords and tenants alike. On June 13, 2024, BBLI Edison LLC filed a complaint in the United States District Court for the Northern District of Illinois against the City of Chicago's Department of Housing, challenging the constitutionality of an amended ordinance that mandates substantial relocation payments to tenants in foreclosed properties.
The case revolves around the Keep Chicago Renting Ordinance (KCRO), initially enacted in 2013 to protect tenants from displacement following foreclosure crises. The original KCRO required lenders who acquired foreclosed buildings to either offer tenants a new lease or pay them a $10,600 relocation fee. However, due to its provisions on rent control, it was struck down by the Illinois Court of Appeals. In response, Chicago amended the ordinance in 2021 to allow tenants to choose between accepting a new twelve-month lease or receiving $10,600 as relocation assistance. BBLI Edison LLC argues that this amendment has created perverse incentives for tenants to vacate their units rather than renew leases, leading to financial burdens on property owners already facing losses from foreclosures.
BBLI Edison LLC owns a property at 5200 North Sheridan Road in Chicago and claims that the amended KCRO violates several constitutional principles. According to their complaint, "the payment provision unconstitutionally seizes private property" and imposes penalties disproportionate to any societal impact. They argue that if half of the tenants in a building with 200 units opt for relocation payments instead of renewing leases, it could cost owners over one million dollars—an unsustainable burden for those already financially strained by foreclosure proceedings.
The plaintiff seeks multiple forms of relief from the court: a writ of mandamus directing Chicago not to enforce or rescind the relocation fee provision; declaratory judgments declaring various aspects of the ordinance unconstitutional; and awards for attorney fees and other costs associated with maintaining this action. BBLI Edison LLC contends that these measures are necessary to prevent further financial harm and uphold their constitutional rights.
Representing BBLI Edison LLC is attorney Cara M. Houck from Holland & Knight LLP. The case is being overseen by judges from the United States District Court for the Northern District of Illinois under Case ID 1:24-cv-04925.